Ukraine will boost its export offering knowledge-based products and promoting small and medium business

28.12.2015

Business, diplomats, government officials and NGOs discussed Ukraine's export opportunities before the launch of a free trade with the EU. The business community noted that despite the preferences provided by Western partners, the volumes of foreign trade

Business, diplomats, government officials and NGOs discussed Ukraine's export opportunities before the launch of a free trade with the EU. The business community noted that despite the preferences provided by Western partners, the volumes of foreign trade have not seen growth, indicating the need to take effective and systematic measures to improve the situation after analyzing the existing advantages and perceived risks. Such risks include the unwillingness of Ukrainian businesses to compete effectively in the European market, as well as the existence of a significant number of obstacles to market development within the country. Participants of the international conference "Export and Import Relations Ukraine-EU 2016: government and business readiness", which was held in the Ukrainian capital Kyiv, drew attention to this issue.

In particular, they noted that in the first nine months of 2015 exports to the EU countries amounted to only $8.2 billion, far less than expected. The main problem consists in the fact that Ukraine still sells raw materials and semi-products to its foreign partners, i.e. raw products with low added value. Prices for this category of products are significantly exposed to fluctuations in the market - varying depending on many factors. The current situation in the global market is characterized by decreasing raw material prices.

"It is important that Ukraine boost its supplies of processed knowledge-based products with high added value. This requires modernization of production, creation of conditions to restore the industrial capacities. If that is the case, Ukraine will be able to operate in the world market for its own benefit, and will stay competitive," said the ULIE President Kinakh.

Currently, small and medium business is showing the greatest progress in entering export markets, according to business representatives, due to being more flexible, resilient and having less time to adapt. However, small and medium businesses are not ready to compete with the European products either. There exist objective reasons for that, namely, the unfavorable business climate, caused by complicated customs procedures, issues with VAT refunds, stringent currency regulations, etc., as well as lack of actions in search for potential markets. Ukrainian exporters are barely interested in learning the subtleties of business conduction in partner countries, customs and legal procedures that are put in place in those countries. They are also not ready for a long-term cooperation.

Ukrainian entrepreneurs propose that the state should eliminate any obstacles for export. This includes extending the mandatory timeframe for bringing into Ukraine hard currency proceeds from 90 days to 180 days, and cancelling the requirement for the mandatory sale of foreign currency proceeds, simplifying and speeding up customs procedures (introduction of the principle of a "single window", automatic processing of customs declarations) and clearing the outstanding debt under VAT refunds to businesses, which amounts to tens of billions of hryvnias.

According to the conference participants, the key prerequisite to a successful export of domestic goods will be the coordinated work of business, community and government officials that will be involved in preparing efficient export development plans and strategies of actions in foreign markets.